China's central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies and support a slowing economy that has been hurt by a trade war with the United States.

China's central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies and support a slowing economy that has been hurt by a trade war with the United States. The People's Bank of China (PBOC) said it will improve the mechanism used to establish the loan prime rate (LPR) from this month, in a move to further lower real interest rates for companies as part of broader market reforms. Analysts say the move, which came after data that showed weaker than expected growth in July and followed a cabinet announcement on Friday, underscores the government's attempts to use reforms to support a slowing economy. "By reforming and improving the formation mechanism of LPR, we will be able to use market-based reform methods to help lower real lending rates," the PBOC said in a statement published on its website. The central bank will "deepen market-based interest rate reform, improve the efficiency of interest rate transmission, and lower financing costs of the real economy," it said. Chinese banks' new LPR quotations will be based on rates of open market operations, and the national interbank funding centre will be authorised to publish the rate from August 20, the PBOC said. It added the rate will be published every month on the 20th, effective this month. Banks must set rates on new loans by mainly referring to the LPR and use LPR as the benchmark for setting floating lending rates, the PBOC said, adding that banks will be barred from setting any implicit floor on lending rates in a coordinated way. The central bank said five-year and longer tenors will be added to the existing one-year LPR, which will help banks set rates on long-term loans such as mortgages. China will add eight small banks, including two foreign-funded banks, to the existing 10 nation-wide banks that will be allowed to submit LPR quotations, the central bank said. The move followed pledges from China's State Council on Friday that the country will rely on market-based reform measures to help lower real interest rates for companies. The central bank said that it will strengthen its supervision on banks' rate quotations and punish banks for irregularities that disrupt the market order. The central bank will incorporate the LPR application into its macro-prudential assessment (MPA) to urge banks to use LPR pricing. SHARPER SLOWDOWN This week's data broadly showed China's economy stumbled more sharply than expected at the start of the third quarter, as the intensifying trade war with the United States took a heavier toll on businesses and consumers. Second-quarter economic growth slowed to a near 30-year low. Tang Jianwei, an economist at Bank of Communications in Shanghai, said the reform could be seen as a guided rate cut as PBOC can guide rates of its open market operations, which will be closely followed by the LPR. "The tool (LPR quotation reform) equals to a guided rate cut, and is only pushed out by the PBOC at crucial moments," said Dai Zhifeng, an analyst with Zhongtai Securities Co. The central bank has pledged to gradually unify two interest rate "tracks" - its market-based rates developed in recent years and its benchmark bank deposit and lending rates. Analysts say the new LPR rate will be lower than the current level, but they are divided over the scope of reductions on borrowing costs for firms. To free up funds for lending and to accommodate local government project financing, most analysts still expect the central bank will cut banks' reserve requirement ratios (RRR) further in the coming months, on top of six reductions since early 2018. Sources have told Reuters that more aggressive action such as interest rate cuts are a last resort, as it could fuel a sharper build-up in debt. In July, central bank head Yi Gang said China would keep its benchmark deposit rate for a relatively long time but would phase out its benchmark lending rate in the push to unify the benchmark lending rate and market-based rates. China's banks currently price their loans based on the benchmark lending rate that has been kept unchanged since October 2015, hampering the central bank's efforts to lower borrowing costs. The PBOC launched the LPR in 2013 to reflect rates that banks charge their best clients. But the LPR has been reacting little to market demand and supply, with the one-year rate currently at 4.31 per cent, versus benchmark one-year lending rate of 4.35 per cent. China's short-term money market rates have been falling more quickly in recent months due to the central bank's cash injections.

China unveils rate reform to steer funding costs lower for firms

Australia&#39;s wealthy Prime Minister Malcolm Turnbull reportedly made a large personal donation to the conservative Liberal Party during the recent fiercely fought election in a move ridiculed by the Labor opposition. 
 
The multi-millionaire, whose Liberal/National coalition was narrowly re-elected, handed over US$760,000 (Aus$1 million) of his own money in the final weeks of the campaign with the party &quot;desperate for finances&quot;, The Australian newspaper said today. 
 
The party did not deny the alleged bail-out but said in a statement that &quot;the claim in todays Australian that the Liberal Party is either in debt or broke is false&quot;. 
 
The newspaper said the money was a &quot;tightly kept secret&quot; and was used to fund television advertising, direct mail-outs and opinion polls. 
 
The donation was mocked by senior opposition Labor politician Anthony Albanese, who told broadcaster Channel Nine: &quot;I wish we had someone who had a lazy Aus$1 million sitting in the corner that could just plonk into the campaign&quot;. 
 
Labor relies on donations and affiliation fees from trade unions for much of its funding. 
 
Turnbull is reportedly worth Aus$200 million through his previous careers as a barrister, businessman and investment banker. 
 
Under Australian law, political parties receive public funding according to how well they perform in an election. 
 
The funding, which is received after the polls, is usually insufficient to pay for campaigns, with parties having to approach donors - individuals and companies - to boost their kitty. 
 
All donations above Aus$13,000 at the national level have to be disclosed, with the latest contributions to be revealed in 2017. 
 
The Liberal Party`s New South Wales branch had Aus$4.4 million withheld from its coffers earlier this year by the electoral commission over its failure to disclose the identity of major donors in 2011 state elections. 
 
(AFP)

Turnbull had donated $760,000 in the final weeks of campaign to help with the finances. The Liberal party did not deny the bailout

Australia's wealthy Prime Minister Malcolm Turnbull reportedly made a large personal donation to the conservative Liberal Party during the recent fiercely fought election in a move ridiculed by the Labor opposition. The multi-millionaire, whose Liberal/National coalition was narrowly re-elected, handed over US$760,000 (Aus$1 million) of his own money in the final weeks of the campaign with the party "desperate for finances", The Australian newspaper said today. The party did not deny the alleged bail-out but said in a statement that "the claim in todays Australian that the Liberal Party is either in debt or broke is false". The newspaper said the money was a "tightly kept secret" and was used to fund television advertising, direct mail-outs and opinion polls. The donation was mocked by senior opposition Labor politician Anthony Albanese, who told broadcaster Channel Nine: "I wish we had someone who had a lazy Aus$1 million sitting in the corner that could just plonk into the campaign". Labor relies on donations and affiliation fees from trade unions for much of its funding. Turnbull is reportedly worth Aus$200 million through his previous careers as a barrister, businessman and investment banker. Under Australian law, political parties receive public funding according to how well they perform in an election. The funding, which is received after the polls, is usually insufficient to pay for campaigns, with parties having to approach donors - individuals and companies - to boost their kitty. All donations above Aus$13,000 at the national level have to be disclosed, with the latest contributions to be revealed in 2017. The Liberal Party`s New South Wales branch had Aus$4.4 million withheld from its coffers earlier this year by the electoral commission over its failure to disclose the identity of major donors in 2011 state elections. (AFP)

Australia PM donated hundreds of dollars to party's election bid

Brazil&#39;s interim President Michel Temer dismissed graft allegations against him as dishonest and reckless, pledging in a national address on Thursday that his government would not be distracted from fiscal reforms aimed at reviving the economy. 
 
Temer said it was &quot;irresponsible, ridiculous, mendacious and criminal&quot; to suggest, as former Petrobras executive Sergio Machado did in plea bargain testimony, that he had sought campaign funds for his party from a graft scheme at the state-run oil company. 
 
The testimony, made public by the Supreme Court on Wednesday, was the first direct link between Temer and the sweeping corruption probe that has thrown Brazil&#39;s politics into chaos and deepened its worst recession in decades. 
 
&quot;I say it again, when an idea as flippant as this comes out, it embarrasses or can embarrass the government&#39;s activity. But I want to say here, to register, loud and clear, nothing will embarrass our intentions, our mission, our task during the period in which I am in front of the presidency of the republic, with an extraordinary economic team, with a foreign affairs team which is equally as extraordinary, and a very adequate ministry. Nothing will impede us from continuing to work for the good of Brazil and the Brazilian people,&quot; said Temer in Brasilia on Thursday. 
 
The highly charged plea bargain implicating Temer and two dozen other elected officials, many of them senior members of his ruling coalition, stole the thunder from a landmark fiscal reform revealed the same day. 
 
Machado&#39;s plea deal included allegations that Temer had sought campaign funds for his party&#39;s 2012 Sao Paulo mayoral candidate from the graft scheme at Petrobras, the biggest ever uncovered in Brazil. 
 
The accusations provide more fodder for suspended President Dilma Rousseff and her allies, who accuse Temer and his party of&nbsp;&nbsp;mounting the impeachment process against her in order to distract from their own roles in the corruption scandal. Rousseff faces a trial in the Senate on unrelated charges of breaking budget rules. 
 
(Reuters)

The testimony by Petrobras executive Sergio Machado has thrown Brazil's politics into chaos and deepened its worst recession in decades

Brazil's interim President Michel Temer dismissed graft allegations against him as dishonest and reckless, pledging in a national address on Thursday that his government would not be distracted from fiscal reforms aimed at reviving the economy. Temer said it was "irresponsible, ridiculous, mendacious and criminal" to suggest, as former Petrobras executive Sergio Machado did in plea bargain testimony, that he had sought campaign funds for his party from a graft scheme at the state-run oil company. The testimony, made public by the Supreme Court on Wednesday, was the first direct link between Temer and the sweeping corruption probe that has thrown Brazil's politics into chaos and deepened its worst recession in decades. "I say it again, when an idea as flippant as this comes out, it embarrasses or can embarrass the government's activity. But I want to say here, to register, loud and clear, nothing will embarrass our intentions, our mission, our task during the period in which I am in front of the presidency of the republic, with an extraordinary economic team, with a foreign affairs team which is equally as extraordinary, and a very adequate ministry. Nothing will impede us from continuing to work for the good of Brazil and the Brazilian people," said Temer in Brasilia on Thursday. The highly charged plea bargain implicating Temer and two dozen other elected officials, many of them senior members of his ruling coalition, stole the thunder from a landmark fiscal reform revealed the same day. Machado's plea deal included allegations that Temer had sought campaign funds for his party's 2012 Sao Paulo mayoral candidate from the graft scheme at Petrobras, the biggest ever uncovered in Brazil. The accusations provide more fodder for suspended President Dilma Rousseff and her allies, who accuse Temer and his party of mounting the impeachment process against her in order to distract from their own roles in the corruption scandal. Rousseff faces a trial in the Senate on unrelated charges of breaking budget rules. (Reuters)

Brazil's Temer denies alleged link to Petrobras scandal

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